Govt panel to prepare road map for raising refining capacity

With India's oil demand projected to more than double in 25 years, government has formed an expert group to prepare blueprint for raising refining capacity by 2040.

The 12-member Working Group for preparing Approach Paper for enhancing refining capacity by 2040 will be headed by Additional Secretary in the Oil Ministry and include directors of refineries at Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL).

It would also comprise of representatives of private sector Reliance Industries and Essar Oil besides managing directors of Numaligarh Refineries Ltd, Mangalore Refineries Ltd and Chennai Petroleum Corp Ltd (CPCL), an oil ministry order constituting the Group said.

India has a refining capacity of 232.066 million tons, which exceeded the demand of 183.5 MT in 2015-16 fiscal.

According to International Energy Agency (EA), this demand is forecast to reach 458 MT by 2040.

"India is one of the fastest developing countries in the world and simultaneously, the world energy demand is expected to double in the next 30 years with energy portfolio undergoing a transition to one that includes a wide range of sources," said an oil ministry order constituting the Group.

Expansions underway will raise the refining capacity to about 260 MT by 2018.

The rise in projected demand, the order said, paves the way for gradual shift towards renewable and cleaner fuels richer in hydrogen or to neat hydrogen.

"It has been envisioned that the energy mix in 2040 could be entirely different from what it is today. Also, new capacities in petroleum refining will depend upon aggregation of demand from different petroleum derived products, which itself depends upon substitution by other forms of energy and government policies," it said.

It was felt that an approach paper for refinery capacity expansion of PSU refineries by the year 2040 needs to be prepared for meeting the growing demand of petroleum products in the country, the order said.

The Working Group would be required to "assess primary energy requirement for 2040" as also "assess likely technological developments in different energy fields", it said, adding that it would then "develop primary energy mix with breakup in terms of gas, oil, coal, nuclear, solar, hydro and biofuel".

Also, it would "assess demand for major petroleum products linking with advancements in use, substitution by other forms of energy, drive on enhancing energy efficiency and government policies".

The order said the Group can also take into account several additional issues which are reticulate and which have a direct bearing on preparation of the approach paper.

"The Working Group will have a tenure of three months," it added.

India has leapfrogged from a modest 62 MT per annum refining capacity in 1998 to 232 MT at end of March 31, 2016.

The growth in refining capacity, which had made India a leading exporter of petroleum products since 2001-02, has been possible because of the de-licensing of petroleum refining by the government.